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Many companies today pilot open innovation (OI) and crowdsourcing, but only few are making it a permanent practice. A consortium of six German SMEs finds that OI can radically improve the productivity of technical problem solving, but demands strong internal promoters and dedicated processes to overcome resistance and barriers.
Open innovation in general and tournament-based crowdsourcing especially has been proven to have the potential to radically improve the productivity of technical problem solving. In tournament-based crowdsourcing, a technical problem of a "seeker company" is announced broadly to a community of external "solvers" in form of an open call. Potential participants screen the challenge and decide whether to invest in solving the challenge and submitting a solution proposal. The seeker then acquires the winning solution, i.e. those that best meet pre-defined performance criteria. In most cases, the problem broadcasting and solution transfer is facilitated by an intermediary like NineSigma, InnoCentive, and Yet2.
Following such a procedure for technical problem solving is, in most instances, a radical departure from a firm's established routines in R&D. For example, seeker companies have to disclose technical problem information and might reveal sensitive information about the firm's future development projects – and areas where this firm lacks problem solving capacity or where it failed in the past. In addition, the company's R&D staff has to acknowledge that "outside people may be smarter than us".
Commonly, such perceived risks invoke internal opposition to pilot open innovation or later lead to the rejection of identified external knowledge by the seeker company ("not invented here"). In an action research project, six German mid-sized companies (many of them, however, world market leaders in their particular field of automotive components or machinery) and the RWTH-TIM research group studied the hurdles and barriers that may occur during crowdsourcing projects and explored a set of practices to overcome these challenges. This analysis was done both within the set of the six companies and a larger study of more than 100 OI challenges globally.
In detail, we identified 11 different barriers types which may emerge in the course of crowdsourcing for technical problem solving: (1) workflow rigidity; (2) NIH (not-invented-here) syndrome; (3) lack of internal commitment; (4) bottom-up management; (5) insufficient resources; (6) allocating wrong task to pilot; (7) insufficient top management support; (b8) unrealistic expectation; (9) legal barriers; (10) organizational / administrative barriers; (11) and communication barriers.
The table below provides some more information on these barriers and how managers in the consortium experienced these challenges in practice.
We find that engaging with powerful minds outside the organization demands powerful support roles within the firm. But there is not one single OI champion. Innovation process are complex and involve different persons, departments, and disciplines. Hence, only a multi-personal role model is effective in providing conditions to overcome inertia in complex innovation projects. We find in our research that a troika of three promoters can help an organization best to overcome the internal forces that hinder open innovation.
These promoters can be differentiated according to their base of power:
(1)The power promoter is a person who has the hierarchical power to drive a project, to provide necessary resources, and to help to overcome obstacles concerning will and bureaucracy that might arise during the course of a project.
(2)The role of the expert promoter describes a person who has the specific technical knowledge for the innovation problem at hand and overcomes barriers of ability. These barriers result from an actual or supposed lack of knowledge in the field of a specific domain.
(3)The process promoter derives her influence from organizational know-how and intra-organizational social networks. She establishes and maintains the connection between the power promoter, the expert promoter, and other project members who are willing and able to contribute to an OI project but do not have the permission to do so due to existing internal rules or limited capacity and resources.
The following table indicates how these roles helped to overcome the barriers identified before:
In our project, we worked with the companies to actively identify key individuals able to fulfill the promoter roles. In more detail, we found that the innovation management function often is a natural process promoter and has responsibility to create methodological knowhow for the organization.
During the initial project kickoff, our team educated the innovation management team of the potential positive role of promoters in OI projects. We jointly developed an instrument to identify key individuals in the respective companies who could fill the particular promoter roles and found large differences in success in those projects which were supported by the promotor troika compared to those who were not.
Strong internal inertia can turn open innovation projects into outright failures. While existing OI literature has focused on the firm level and has primarily taken a strategic perspective, our project explicitly examined OI practices at the project level.
Based on a detailed process model, we were able to identify stage-specific activities and operations that could, if executed correctly, prevent barriers and obstacles during the application of the method.
In our own pilot projects, we found that the promoter troika could overcome the challenges and hurdles of making open innovation in a powerful way:
- The process promoter helps to overcome barriers #5, 7, 8, 9, 10 and 11 by communicating the novel approach, establishing contacts, processing and preparing information, preventing administrative barriers, guaranteeing objectivity (especially during the evaluation stage of the crowdsourcing process) and inspiring further internal stakeholders to apply the crowdsourcing method.
- The power promoter helps to overcome barriers #1, 2, 3, 4, 5 and 11 by allocating scarce resources (budget as well as staff hours) and safeguarding the support of the legal department.
- The expert promoter helps to overcome barriers #6 und 8 by selecting the technical problem suited for OI, compensating knowledge gaps, creating internal awareness of the problem, ensuring professional accuracy of the evaluation process, and actively supporting the cooperation with solution providers.
In more detail, we observed the following practical impact of the promoter interventions:
Stage I: Initiation. In our pilot cases, a manager from the innovation team identified her/himself as a potential process promoter after learning about this role. These managers addressed their heads of departments in order to introduce the method: “To some extent, I had to take the role of salesman, a role in that one cannot decide but has to promote something to others so that they decide for it”(innovation manager from Case Company 5).
The motivation of this intervention was to start the entire piloting process with a "problem owner", i.e. an individual who would provide a technical challenge that would originate from her or his actual work. Instead of asking departments to "donate" problems, the process promoter actively engaged in search for a head of department who wanted to pilot the method in order to solve a given technical problem (and not for the pilot's sake), and hence would also allocate own capacities and resources.
Stage II: Contract negotiation. The legal department got involved in the cooperation with the intermediary at an early stage. Both the power and the process promoter took large care to engage the legal department already in early meetings with the intermediary.
Stage III: Problem formulation. During the stage of the actual formulation of the RFP, the expert promoters were in close touch with the intermediary and worked on the RFP drafting, providing her professional competence regarding the technical problem.
Stage IV: Open call. The intermediary handled the majority of work during this stage. But as the contact already had been established, the process and expert promoters were available for inquiries of the intermediary and could provide swift feedback on any issues that came up during this stage.
Stage V: Evaluation of responses. The role of the promoters was to provide both feedback on the solution proposals and to organize other experts from the companies. The process promoter was present as a moderator during the meetings. They could intercede if they felt that an idea was evaluated negatively due to a lack of comprehension of the proposed solution approach or any (unjustified) objections towards the institution of the solution provider.
Stage VI: Reintegration. All three promoter roles were active in utilizing the best solution internally and guaranteeing a swift in-licensing from the external technology provider. In the projects that followed our idea of an open innovation promoter troika, the effectiveness of this method was much higher compared to crowdsourcing tournaments without this "hack".
Most importantly: When piloting open innovation, acknowledge that this will be not easy. Overcome the common belief that crowdsourcing projects are an immediate success. Yes, the wisdom of the crowd may solve your R&D problems almost automatically, but you still have to work to put this knowledge into practice in your organization!
Also, OI does not come for free. It demands a great deal of internal resources to execute such projects. Effective crowdsourcing requires commitment, contributions, and capabilities of a few key individuals (promoters) whose involvement becomes a key success factor.
Hence: First get to know who these promoters could be in your organization (by the way: chances are that you already are one of them, if you are interested in reading this!). While there is some detailed methodology how to do so, intuition helps!
But what if you want to stimulate the identification from a manager´s point of view?
Basically there is no panacea or best known approach for the identification of promoters. However, we identified two strategies that have proven to be quite successful to recognize individuals with promoter characteristics. The first approach is based on a network analysis. In this case, the search begins with sending out a questionnaire to all company employees asking them a set of questions related to persons with distinct promoter characteristics e.g. (and these are only some examples of questions):
Who of your colleagues …:
- ...is especially receptive to novel (problem solving) approaches and does not hesitate to share and discuss his/her ideas openly with others?
- ... does, in your opinion, follow a particularly creative approach to problem solving?
- Who do you go to when certain technical expertise in the field of X is lacking in a project?
- Do you know someone in your company who has a unique position insofar as she/he is combining outstanding technical as well as business/management expertise?
- Who do you ask for help when critical resources are missing in an innovation project and there is no time to follow the regular procedures?
The result of this analysis is a map of key persons of the company who are potential promoter candidates.
The second approach is based on a pyramiding search process which has proven to be very efficient in the context of lead user identification. Requiring an average of only 30% of search effort as compared to a full screening process, pyramiding is often faster and less expensive than a comprehensive network analysis. Here, the same set of questions (slightly different formulation though) is addressed to a limited number of employees. The researcher uses a system of referrals to network himself up to the top of the pyramid to find individuals who best meet the desired attributes. For a detailed description of this search please refer to [von Hippel, Eric; Franke, Nikolaus and Prügl, Reinhard Wilhelm. 2009. Pyramiding: Efficient search for rare subjects. Research Policy, 38 (9). pp. 1397-1406]. In the course of our research we applied the pyramiding approach in combination with our questionnaire to identify promoters.
Organizations interested in implementing OI successfully have to integrate promoter roles early in the process in order to succeed. Starting with the process promoter is a pragmatic procedure. The process promoter then can find a cooperating power promoter who in turn may nominate a motivated expert (promoter) from her subordinates.
But remember: Informal identification via self-selection is key. So, for example, the power promoter should not delegate a task to the expert promoter, but should offer it as an interesting opportunity. And even if you identified persons who might be capable of working as a promoter through the mentioned approaches, you can not delegate this role - you can just offer it as a great opportunity!
We are grateful to the FVA im VDMA (Forschungsvereinigung Antriebstechnik im Verein Deutscher Machienen- und Anlagenbauer, a group of 250 German SMEs in the automotive and driving industry), who supported this research financially with a FVA grant, but more importantly with access to their membership base and introductions to the case study companies described in this research.
Earlier versions of this research have been presented at the ISPIM 2012 Conference at La Salle University Barcelona, the 2012 EURAM conference at RSM Rotterdam, and the Open User Innovation Workshop 2012 at Harvard Business School.